Statement: EITC Expansion Superior to Minimum Wage Hike; Union Benefit?


March 31, 2016
Minimum Wage Hike Will Cost Jobs; EITC Expansion Promotes Work

Providence, RI — The Rhode Island Center for Freedom & Prosperity believes that every Rhode Islander who strives to work hard should be able to earn enough income to support themselves and their families. The question, of course, is how employment for those at the bottom of the income ladder can meet that productive goal.

With the debate on the state minimum wage to resume at today’s House Labor Committee hearing on H7285, a bill that would raise the mandated wage to $10.50, the Center recommends that expansion of Rhode Island’s Earned Income Tax Credit (EITC) as a superior alternative.

“Hiking the minimum wage will cost jobs for many of the people it is intended to help. It is anti-family and it is anti-business,” commented Mike Stenhouse, CEO for the Center. “Conversely, EITC expansion helps low income families without the risk of job loss and without directly harming small businesses.”

Per a policy brief it published today, the Center recommends a pro-family solution that enhances family income without risking jobs for poor families: Pass EITC expansion and leave the Rhode Island minimum wage where it is.

Wage Hike a win-lose. A past research report by the Center showed that the vast majority of people who would receive a raise under a minimum wage hike are not the low-income, minority, or primary family breadwinners … as supporters of the hike would like us to believe. Indeed, based on that 2013 report, of minimum wage workers who would receive a raise in the Ocean State:

  • 80% were white, with 71% as part-time workers
  • $61,000+ was their average family income
  • Only 14% were primary family breadwinners

The research also showed that a hike could destroy thousands of jobs in the Ocean State, many of whom would be low-income breadwinners who are most in need of upward mobility, and would be a negative drag on the economy.

EITC a win-win. Conversely, expansion of the EITC tends to be an incentive to work more hours, and as opposed to most other public assistance programs, can put families on a path to economic independence, without risking opportunities for work.

Union Benefit? The Center also questions the motives of local labor unions, who are ardent supporters of a minimum wage hike. Unlike their stated claims of helping average Rhode Islanders, according to a Wall Street Journal article, many union workers, who already earn far above the minimum wage, have wage rates that are pegged to the national or state minimum wage … meaning that an increase to the minimum wage may also mean a raise for many of their middle- or high-income members. Labor leaders are encouraged to disclose whether any Rhode Island collective bargaining agreements contain similar provisions.

For additional statistical breakdowns and analysis, see the Center’s full 2016 minimum wage policy brief .

Media Contact:
Mike Stenhouse, CEO
401.429.6115 |

About the Center
The nonpartisan RI Center for Freedom & Prosperity is Rhode Island’s premiere free-enterprise research and advocacy organization. The nonprofit Center is funded entirely by private tax-deductible donations and never accepts public funding. The mission of the 501-C-3 organization is to return government to the people by opposing special-interest politics and advancing proven free-market solutions that can transform lives by restoring economic competitiveness, increasing educational opportunities, and protecting individual freedoms